Preparation for Islami Bank Promotion Exam Part1

Viva Tips

                                      

Inoperative account:  

When no operation in the AWCA for 6 (six) months & MSA, SND for 12 (twelve) months is called Inoperative Account.

Dormant Account:

When no operation in the AWCA for 12 (twelve) months & MSA, for 2 (two) years is called Dormant Account.

Unclaimed Deposit Account/ Tamadi Account:

No transaction for ten years, such type of account is called Tamadi Account, AOF, SS Card, & other documents relating inoperative accounts for transferred to BCD through FAD for onward submission to Bangladesh Bank.

Requirement for different types of Account

Private individuals (Single & Joint)

a. Specimen Signature card

b. Letter of Authority

c. Survivorship form in case of joint account.

Private Firm (Proprietorship & Partnership)

a. Trade License.

B. In case of Proprietorship firm, copy of partnership deed.

Limited Company:

a. Certificate of Incorporation

b. Copies of memorandum & Article of association

c. Certificate of the Registrar

d. Certificate copy of Resolution

e. List of the directors

Club / Association/Societies/educational Institution

a.              Copies of By laws

b.               Resolution of the Executive Committee.

c.              List of the members of Executive

Cost free deposit:

1. CA Deposit, 2. Profit payable,

3. Sundry deposit, 4. DD payable,

5. TT Payable, 6. Payment Order Payable

Suspense Account:

When charging of expenditure become necessary but can not be made with due approval for the want of maturity/ supporting papers, in these cases expenditure may be incurred to the debit of Suspense account.

Sundry Account:

When the amount received by the Bank can not be credited to the relative head of accounts for certain reasons, as like wrong account number, absence of beneficiarys name. In order to overcome the above situation Bank is required to keep such type of amounts in sundry Deposit Account.

Profit Suspense Account:

Amount recovered against the profit kept in Profit suspense account is transferred to Income account after realized.

Compensation Suspense Account:

Amount recovered against the Compensation kept in Compensation Suspense Account   is transferred to Compensation Realized Account after realization the adjust of Investment..

Cheque:

Cheque is an unconditional ordered by the drawer or clients to the banker to pay sum of money.

There are three parts:

01.       Drawer

02.       Drawee

03.       Payee.

Parties of a cheque

01. Signature & Date,

02. Specified page

03. Printed

04 Paid by ordinary currency

 05. Presentation

06 Specified amount

07 3(three) parties

08. Figure & Amount will be equal.

Types of a Cheque:

1. Bearer Cheque

2. Order Cheque

Order/ Bearer Cheque is classified again in two types:

1. Open Cheque

2. Crossed Cheque:  When a bearer or drawer of a cheque draws two parallel transverse lines on the top & in the left side of a cheque is called Crossing Cheque. 

Crossed Cheque is classified again in five types:

a. General Crossed Cheque : When a cheque bears of the words   & Co, not negotiable, a/c payee  etc. between two parallel transverse line is called general crossing .

B.A/C Payee crossed Cheque

c. Not transferable crossed Cheque

d. Not negotiable crossed cheque

e. Special crossed cheque: A cheque bears its face an addition of the name of the bank with or without the words not negotiable, a/c. payee is called special crossing.

Post dated Cheque:

A post-dated cheque is one which bears a future date.

Antedated Cheque:

Antedated Cheque is one which bears a previous date before the date of issuing cheque book.

Stale Cheque:

Stale cheque is one which remains in circulation for more than six months.

Stop payment of Cheque:

1. Direction comes from the account holder for stop payment
2.  Any notice received regarding lost or stolen of cheque
3.  Injunction imposed by the court/ tax office to stop transaction of any account.
4. Notice received regarding death of account holder.
5. Direction given by account holder to stop

Garnish Order:

It is an order by the court, by which any creditor can croak any fixed amount or total amount of the debtor deposited to any third party. Third means banker.

Endorsement:

Signature on backside of any instrument for negotiation is called endorsement.

Endorsement is five types

1. Special Endorsement: the endorser specifies the person to whom or to whose order the instrument is to be paid.

2. Blank Endorsement:   The endorser does not specify an endorse.

3. Restrictive endorsement: The endorser prohibits further endorsement.

4. Conditional endorsement: The endorser excludes his liability conditional

5. Partial endorsement: The endorser transfer of the ownership of the instrument but this is not operative for negotiation of the instrument.

Duties & responsibilities of Second Officer:

The 2^nd Officer is the joint custodian of cash.  He is under the superintendence of his Manager, he must obey the instructions of the Manager.  He has at the same time direct & personal responsibility to the Head Office in regard to the proper conduct of Banks business. It is his duty to report to the Head Office any deviation from the rules & regulations of the Bank which he considers detrimental to the Banks interests and any defect in the Banks security of which the Head Office may be unaware. Ordinary such reports should be submitted to the Manager for transmission to the Head Office. He should only address the Head Office direct in exceptional circumstances particularly in cases of irregularities where the Manager is involved either directly & indirectly.

14^th Manual of Bank named:   Human Resources Policy Manual

Leave: The following kinds of leave may be granted to an employee:

1. Privilege leave: Every employee shall earn Privilege Leave on full pay at the rate of one- eleventh of the period spent on duty, that is one day, for every eleven days of duty & the leave shall be credited to his leave account and the leave so credited exceeding 180 days shall be transferred to a separate leave account to be maintained in the name of concerned employee which may be availed on full pay on Medical Ground.  He has got 120 days Privilege Leave at the time of applying for Recreation Leave.

2. Extra Ordinary Leave: If a permanent employee wants to   undertake higher study in or outside Bangladesh at his own initiative, he may be granted extraordinary leave not exceeding three years.

3. Quarantine Leave: It is applicable for infectious disease in the family or household of a n employee & such leave may be granted by the competent authority. On the certificate of the authorized Medical Officer for a period not exceeding 21 days

4. Matrernity Leave:  period upto the end of three months from the date of its commencement or to the end of six weeks from the date of confinement.

5. Casual Leave:  Maximum 15 days in calendar year, but not for a period exceeding 7 (seven) days at a time.

Compensation Policy:

1. Provident Fund: Every confirmed & full time employee shall be entitled to Provident Fund as per its rules at the time of Retirement/ Resignation/Termination/Death.

2. Gratuity Fund:

The Dismissed/Removed employees shall not be entitled to any gratuity

Gratuity is as follows:

1.	For 7 years & above but below 12 years service	1 months basic pay for each completed year of service or fraction thereof.
2.	For 12 years & above but below 20 years service	1.5 months basic pay for each completed year of service or fraction thereof.
3.	For 20 years & above service	2 months basic pay for each completed year of service or fraction thereof
4.	In case of premature death during the tenure of active service	2 months basic pay for each completed year of service and fraction thereof irrespective of service period.

3. Social Security Fund:

The Dismissed/Removed/Resigned/Terminated employees shall not be entitled to any amount of Social Security Fund

Sl No.	Category of employees	Rate of contribution per month	Death benefit	Disability benefit		Retirement benefit
				Rate per year of service	Maximum	Rate per year of service	Maximum
1.	Avp & above	800/-	15.00 lac	48000/-	12.00 lac	40000/-	10.00 lac
2.	Officer upto SPO	400/-	10.00 lac	36000/-	9.00 lac	30000/-	7.50 lac
4.	AOG/RDS	220	8.60 lac	26000/-	6.50 lac	22000/-	5.50 lac
5.	Sub staff	100/-	5.00 lac	18000/-	4.50 lac	15000/-	4.00 lac

Equity:

01. External Equity-Long term & Short Term liabilities 02. Internal Equity-Owners equity & share capital

Call Money:

Interesting bearing deposits repayable either on demand or after a period of notice depending upon the terms of contract.

Narrow money: Cash in hand & amount wthdrawable by cheque.

Broad money: Cash in hand & all types of deposit.

Hard Money: Other than cash but near to cash i.e. DD, Cheque, PO etc.

Balance of Trade:  

Balance of Trade of a country is a systemic record of economic transaction of visible commodities between the residents of the reporting country and the residents of the rest of the world over a specified period of time, usually one year.

Balance of Payment:  

Balance of Payment of a country is a systemic record of all economic transaction of visible & invisible commodities between the residents of the reporting country and the residents of the rest of the world over a specified period of time, generally one year.

Working Capital:

A business started with a capital of Tk.25000/- out of which Tk.15000/- is spent in purchasing the fixed assets the working capital will be Tk.10000/-

Paid up Capital: 

The Capital of share holders.  Present Paid up Capital of IBBL is 380 core.

Authorized Capital:

Bangladesh Bank gives a limit to the schedule Bank that their limit cannot be exceeded.  The authorized capital of IBBL is 500 cores.

What is Perpetual Bond

It is related with paid up capital & it is increasing the amount of paid up capital.

What is Weight age: The valuation of Deposits & Accounts is called weight age.

CTR: Cash Transaction Report: The accounts which are transaction minimum seven lac those accounts are reported to the Head office, it is treated CTR.

STR: Suspicious Transaction Report:

The transaction of the accounts becomes suspicious to the Bank, it is treated Suspicious Transaction. This is reported to the Head Office.

CRR: Cash Reserve Ratio

 Every schedule Banks are obliged to reserve 5% CRR against its total deposit in cash in Bangladesh Bank. The CRR to be maintained with Bangladesh Bank.

SLR: Statutory Liquidity Reserve:

Every schedule Banks are obliged to reserve 13% SLR against its total deposit. . Alternatively   for Islamic Banks  this ratio is 10 %

ILOR (Investment Loss Offsetting Reserve):

It is preserved to overcome the unidentified Investment Loss support.

MIS: Management Information System

CAMEL: These are measuring rod of a financial Institute for measuring their strength & status.

01. Capital Adequacy 02. Assets value 03. Management ability 04. Earnings captivity 05. Liquidity

06. Shariah

FSRP: Financial Sector Reform Programme. It is lead in1990 for measurement the strength & status in the banking sector of Bangladesh. There are following criteria

01. Strong*

02. Good

03. Satisfactory --- Appointed the advisor by Bangladesh Bank

04. Marginal ---Keep under observation by Bangladesh Bank.

05. Bad --- Appointed the administrator by Bangladesh bank

GDP: Gross Domestic Product: generally one year, the economic value of the commodities & service are produced in a country including by the expatriate living in territories is called GDP.

GNP: Gross National Product: generally one year, the economic value of the commodities & service are produced in a country including by the expatriate is called GNP.

NNP (Net national Product) GNP- Capital consumption allowance = NNP.

Holder in due course: Any negotiable instrument is received with good faith from the person, in the ownership of him has no confusion & the present owner is not liable for any fraudulent    in the ownership of previous owner.

Payment in due course:

With good faith The value of any negotiable instrument is paid to any person, in  his ownership has no  logical cause of fraudulent.

Why expenditure is Asset:

Expenditure incurred by a Bank for earning the Income by the owners. Owners owe this amount to the organization and who will recover the amount of expenditure from the owners. Since receivable are assets, hence expenditure is an assets.

Why Income is liability:

Income earned by a Bank is payable to the owner & depositors of the Bank. As payables are liabilities hence Income is liability

Al waddeah:

Al wadeah means, the Bank receive the money from the clients for safe custody with the condition to return the money on demand. The Bank can use the money at Banks risk. The customer cannot receive any benefit from the Bank in return.

In terms of Al wadeah the Bank is called Mudda & the depositors are called Muddi.

Clearing House:

Clearing House is a process to settlement the different type of instrument of different Bank under leadership the Bangladesh Bank or Sonali Bank.

Transfer Delivery:

It is a process to settlement the different type of instrument of the same Bank under leadership a corporate Branch.

Non encumbrance certificate:

It is a certificate that is provided by registration office mentioning that immovable property has no mortgage to any place.

CS: Cadastral Survey:  First survey ---1885-1922

SA: State Acquisition: Second survey 1958-1962

RS: Revisional Survey:  This   survey is causes in the age of Bangladesh

BS: Bangladesh survey: The last survey is going now.

Power of Attorney:

The power given to anybody for acting any work on behalf of him is called power of attorney.  

What is Guarantee?

When a third party takes the responsibility to return the money on behalf of the debtor is called Guarantee.

Bank Guarantee:

When a Bank takes the responsibility to return the money on behalf of the debtor

Or/ A Bank Guarantee is an undertaking given by a Bank to perform the promise or discharge the liability of its customer in case of his default. .

Indemnity:

Indemnity is a contract in where one party is promised to safe another party from any losses.

Difference between guarantee & Indemnity:

01. There are three parties the guarantee & two in indemnity.

02. Guarantee is for recovery of the investment & Indemnity is for safety from losses.

[Mortgage of Movable Property:

Pledge: The possession of goods is transferred by a mortgage of movable property.

Hypothecation The possession of goods is not transferred by a mortgage of movable property.

Non Performing Investment

1. Overdue Investment

2. Classified Investment

3. Rescheduled Investment

4. Writt off Investment

Overdue Investment:

Any continuous Investment if not repaid/renewed within the fixed expiry date for repayment will be treated as overdue from the following day.

Classified Investment: 

To strengthen credit discipline & impose the recovery position of Investment Bangladesh Bank has introduced a phase wise program for Investment & provisioning was undertaken by Bangladesh Bank at first 31^st December 1989 by (FSRP) circular No-BCD-34 dated 31.12.1989.

Rescheduled Investment:

When Investment client did not able to pay the amount & he approaches to Bank for deduction the profit, compensation, etc. from his liability.  In this term, Bank apply to Head Office for deduction the same as per parties application after obtaining the application, receiving  15 % down payment from the client & Head Office can deduct the same. Mentionable here  

Written of Investment:

Overdue for a period of 5 (five) years, suit is going on which has no probability to recovery, such type of Investment separated from the Head of Investment in Clean cash Book & General Ledger & requires to be kept & shown a new Head of A/C should be opened under contra side of Clean cash Book & General Ledger named Written of Investment A/c in the assets side & Written of Investment cover Account in the Liability side. When amount is recovered it is adjusted at that time. 

 Non profit bearing Investment:

QTDR, OPF, OBF, OHGEN, Profit  Receivable, Unearned Income,, (FBN ) Foreign Bill negotiation,  Share & Security

Categories of Investment:

1. Continuous Investment:

a. Amount of Limit

b. Time Limit

c. It has an expiry date for full adjustment.

2. Demand Investment: It is repayable on demand by the Bank

3. Fixed Term Investment: It is repayable within specified time.

4. Short Term Investment: Credits in Agriculture sector repayable within (1) one year

Basis for Investment Classification:

A. Objective Criteria:

Sl No	Categories of Investment	SMA	SS	DF	BL
CL-2	Continuous	3-6	6-9	9-12	12 & above
CL-3	Demand Investment	3-6	6-9	9-12	12 & above
CL-4	Fixed Term Inv.	3-6	6-12	12-18	18 & above
CL-5	Fixed Term Invt. (Above 5years)	9-12	12-18	18-24	24 & above
CL-6	Short Term Agriculture	N/A	12-36	36-60	60 & above

Special Mention Account (SMA):

A continuous Investment, Demand or Term Investment which will remain overdue for a period of

3 moths or beyond but less than 6 months Will be put into the SMA.

Sub Standard (SS):  It is overdue for 6 months or beyond but less than 9 months.

Doubtful (DF): It is overdue for 9 months or beyond but less than 12 months

Bad/ Loss(BL): It is overdue for 12 months or beyond.

B. Qualitative Judgment:

If any uncertainty or doubt arises in respect of recovery of any type of Investment the same will have to be classified on the basis of Qualitative Judgment.

What is Provision

In order to risk free the deposits of the people, Bank has to savings the fixed amount against classified Investment.

Base for Provision: 

Outstanding Balance of Classified Account, Profit/ Rent, Compensation suspense, Profit suspense, value of eligible securities.

Rate of Provision requirement will be calculated as under:

Continuous, Demand, Term Investment		Agricultural Investment
UC	1 %	UC	5 %
SMA	5 %	SMA	NIL
SS	20 %	SS	5 %
DF	50 %	DF	5 %
BL	100 %	BL	100 %

Causes of Overdue:

01.   Selection of clients are not carefully & judiciously

02.   Goods are not properly selected

03.   Appraisal of Investment is not done properly

04.   valuation of securities is not made accurately

05.   Investment is allowed on easy terms

06.   Lack of constant follow up

07.   Investment is allowed to relatives

08.   Instead of trading, lending of money is practice

What is Risk?

Change of variation in expected outcome, possibility of suffering loss

Some Risk is araised in Banks

1. Investment Risk,

2. Liquidity Risk,

3. Market Risk,

4. Profit rate risk,

5. Foreign Ex Risk,

6. Operational risk,

7. Solvency risk,

8. Contingency risk,

9. IT risk & Human risk

5 (Five Core Risk)

1. Investment Risk

2. Assets & Liability Risk

3. Foreign Exchange Risk

4. Internal Control & Compliance Risk

5. Money Laundering Risk

Investment Risk Grading (IRG)

IRG is a dynamic process for identifying risk involved with the Investment clients based on five Risks

(Financial Risk, Business Risk, Management Risk, security Risk, relation ship Risk) associated with that client. In 1993, Bangladesh Bank suggested & introduced by financial sector Reform Project (FRSP) in the captioned IRA- Investment Risk analysis. In -2003 Bangladesh Bank amended in the name of CRM-Credit risk management. In -2005 Bangladesh Bank amended in the name of CRG- Credit risk grading which denotes by IBBL named Investment risk grading.

Score of IRG:

Grading	Short Name	Score	Provision
Superior	SUP	Fully cash secured, secured by government
Good	GD	85
Acceptable	ACCPT	75-84
Marginal	MG	65-74
Special Mention Account	SMA	55-64	1%
Sub Standard	SS	45-54	20%
Doubtful	DF	35-44	50%
Bad & Loss	BL	<35 span="">	100%

Investment Risk Grading Process/ Following Risk are arises for Clients/How to Compute IRG/ Key parameter of IRG:

01. Financial Risk: Leverage, Liquidity, Profitability, and Coverage

02. Business /Industrial Risk: Size of business, age of business, Business Outlook,

Business growth, Market competition,         

03. Management Risk: Experience, Succession, and Teamwork

04. Security Risk: Security Coverage, Collateral Coverage, Support

05. Relationship Risk: Account conduct, Utilization of limit, Personal deposit.

Weight age of Investment Risk Components:

Principal Risk	Weight age
Financial Risk	50 %
Business Risk	18 %
Management Risk	12 %
Security Risk	10 %
Relationship Risk	10 %

IRG review:

Sl No.	Particulars	period
1.	Superior	Annually
2.	GOOD	Annually
3.	Acceptable	Annually
4.	Marginal	Half yearly
5.	SM	Quarterly
6.	SS	Quarterly
7.	DF	Quarterly
8.	BL	Quarterly

Capital Adequacy of Risk (CAR)

It is a new arrangement for assessing the capital adequacy of Banks that is introduced by Bangladesh Bank on the basis of RISK –WEIGHTED ASSETS

Risk –Weighted Assets: means Balance sheet assets & off- balance sheet which are to be weighted as per  to their relative risk.

Presently, there are 4 (four) categories of risk weights-0, 20, 50 & 100 percent.

Each Bank will maintain a ratio of capital to “Risk Weighted Assets” of not less than 9 % to 10%  of which 5.00% in core capital.

BIS: means Bank for International Settlements. It was established in 1930, Head Office, Basel, Switzerland, Members 55 central banks, It has an important committee named The Basel Committee on Banking Supervision.

Basel Committee: Basel is the name of a place of Switzerland wherein a committee was established to follow up & supervise the banking activities. It was established by the central bank governors of the group of ten countries in 1975.

Basel-1: The first accord named Basel-1 adopted in 1988.  As per basel-1, the Banks  were required to maintain  equity  8 %  on its Risk Weighted Assets, Risk Weighted assets means Balance sheet assets & off- balance sheet which are to be weighted as per  to their relative risk. Presently, there are 4 (four) categories of risk weights-0, 20, 50 & 100 percent. Each Bank will maintain a ratio of capital to “Risk Weighted Assets” of not less than 9 % to 10% of which 5.00% in core capital effective from 31.12.2007.

Basel-11:

The new Capital Adequacy Framework which to be implemented in Banks in Bangladesh from 01.01.2009, Basel-II implementation Unit has decided to parallel run of Basel-II from 30.09.2007 and full operation from 01.01.2009. In this connection, a core team has been formed with the three Executives of IBBL including one IT expert & they have been working to prepare the data base of Investment clients for implementation of the internal rating Basel (IRB) approach by the year 2012

There are three reinforcing pillars:

01.  Pillar-I: Minimum capital requirement

02.  Pillar-II : Supervisory review

03.  Pillar-III:  Market discipline

Pre Audit memo:

Pre Audit Memo is a self audit which is implemented by Banker wherein indicate the all required papers & documents of Investment client. There are 5 (five) criteria as under-

A. Fill in Name of Client/firm/ Company /Mode of Investment/Liability/ Stock Position/Value of Collaterals.

B. As per sanction terms the client executed charge documents & recorded in branch’s Documents Execution Register duly signed, dated, filled-in, stamped & witnessed.

C. Declaration of Reports

D.  Checking the Mortgage Documents.

E. The client is yet to execute the following documents as per sanction terms of the Investment.

Document: 

It is a written record which serves as an evidence in respect of a transaction

Generally Documents are two types:

1. Charge documents
2. .Mortgage documents

Charge documents are two types:

1. Common Charge Documents:

2. Addition Charge documents as per Mode

Common Charge Documents:

01. Application form

02. Balance Confirmation Letter

02. Single Party D. P. Note

03. Double Party D. P. Note

04. D. P. Note Delivery Letter

05. Letter of Disbursement

06. Letter of Guarantee

08. Letter of Installment

Addition Charge documents as per Mode:

01. Agreement for pledge goods

02. Insurance Policy

03. Letter of Disclaimer

04. Murabaha Agreement

05. Sanction Advice

06. Trust Receipt

Mortgage:

A Mortgage is the transfer of an interest in specific immovable property as a security for repayment of a debt.

Types of a mortgage:  a. Equitable Mortgage b. Registered Mortgage

Equitable Mortgage:

As security of Investment, the document of any immovable property is kept to the Bank for mortgage is called Equitable Mortgage.

Registered Mortgage

As security of investment any immovable property is transferred to the Bank through Registration is called Registered Mortgage.

Mortgage Document:

01. Original Title Deed.

02. Bai Deed

03. CS, SA, RS Mutation Parcha

04. DCR

05. Up-to-date Rent Receipt

06. NOC

07. Site Plan/Naksha

08. Valuation Certificate

 09. Lawyers Opinion

10. Power of attorney 

11. Memorandum of Deposit of Title Deed  

 12. Registered Mortgage Deed.

How types to process for making an Investment:

1. Induction of client
2. Application
3. Processing ^& Appraisal
4. Documentation
5. Disbursement
6. Purchase of Goods
7. Follow -up, supervision, Recovery Adjustment

Rent: Rent is the price of the service of the asset. Value of both service & price are equal. No lost, no gain.

Loan: Loan means one kinds of lend, may be money or goods if he returned the same for which payment is made at a future date or within a fixed period.

Investment: Investment means invest to goods or assets to increase capital

Investment Mechanism

01. Bai mechanism

a. Bai Muranaha b. Bai muazzal c. Bai salam d. Bai Istisnah

02. Sharing on Partnership Machanism

a. Mudaraba

b. Musharaka

03.Shirkatul Melk Machanism

a.              Hire Purchase Under Shirkatul Melk

Modes of Investment:

Bai Murabaha:   have been derived from the arabic words Bai & Ribhun. Bai means purchase & sale & the word Ribhun means agreed upon profit. So Bai Murabaha menas sale on agreed upon profit.

Bai Murabaha is a contract between a buyer & a seller which the seller sells the certain specific goods permissible under the Islamic Shariah & the law of the country to he buyer at a cost plus agreed profit payable in cash or on any fixed future date in lump sum or by installments. The profit marked may be fixed in lump sum or in percentage of the cost price of the goods.

Bai Muazzal :  Bai Muazzal have been derived from thearabic words Ba & Azl. Bai means purchase & sale & the word Azl means a fixed time or within a fixed period.

Bai Muazzal is a contract between a buyer & a seller under which the seller sells certain specific goods that is permissible under the Islamic Shariah & the law of the country to the buyer at an agreed fixed price payable at a certain fixed future date in lump sum or by fixed installments.

Hire Purchase Under Shirkatul Melk :  is a special type of contract . Actually, it is synthesis of three contacts: Shirakt, Izarh & sale.

Shirakat means partnership, Shirkatul Melk means share on ownership. In this case,share the benefit as per agreement and bear the loss in proportion to their respective equity,

Izarah : It is a hire agreement under which a certain asset is hired by the hiree to a  Hirer against fixed rent for a specified period.

Sale : this is a sale contract between a buyer & a seller under which the ownership of certain goods is transferred by seller to the buyer against agreed upon price paid by the buyer.

Mudaraba: Mudarab has been derived from the arabic words Darb. It means movement to earn rahmat of Allah.Mudaraba is agreement where one party will supply the capital & another party will be operate the business using his merit, energy, labor etc.The principles of Mudaraba the bank use the money of depositor with honesty, sincerity, carefully & properly. The depositor has no role in the operations of business. The profit will be distributed as per agreement between the bank & the clients and total loss will be accepted by the clients,

In terms of Mudaraba, the supplier of capital is called Shahib Al Mal, & the user of capital is called Mudarib.

Musharaka:  

Musharaka is a contract of partnership between two or more individuals or bodies in which all partners contribute capital, participate in the management, share the profit as per pre agreed ratio and bear the loss.

Market Value: At which rate any immovable assets which can sell in the market   is called market value.

Forced Value: At which rate any immovable assets which can sell in the market at once    is called market value.

Negotiable Intrument Act-1881

Negotiable: means transferable by delivery, Instrument: means a written document, Act: means a kind of law.

A negotiable instrument is a piece of document which entitles a person to some of money and which is transferable from person to person by mere delivery or endorsement

In fact, it is an act to define the law relating to promissory note, Bill of Exchange, Cheque, Demand Draft, Bill of lading, prize bond, payable either to order or bearer. 

It is incorporated 1866, Law is passed 1881, implemented 1^st March,1882. There is Chapter- 17 &  Section -139

Promissory Note:

Promissory note is an unconditional promise in writing made by one person to another, signed by the maker at a fixed future time, a certain sum of money to order of a specified person or to bearer.

Bill of exchange:  Bill of exchange is a written acknowledgement of debt by a buyer to the seller in case of credit transaction.

Not negotiable Instrument:

01. Postal Order

02. Govt. Notes

03. Money Order

04. Share Certificate

05. Payment Order

Some Important laws of Banks:

1. Bank Company Act-1991

2. Contract Act-1872

3. NI Act-1881

4. Artha Rin Adalat-2003

5. Money laundering Act-2002

6. The Company Act-1994

7. Limitation Act-1908

8.  The Bankruptcy Act-1997.

Artha Rin Adalat-2003

Eradicate the defaulter culture in banking sector & recovery the credit from willful defaulter, Bangladesh Government has passed a law named Artha rin Adalat-2003 which is signed by respectable president of Bangladesh 10^th March-2003 & implemented from 1^st  May-2003.

Contract Act-1872:

Contract Act appears to be built upon a succession of definition of the elements which make a contract, that is to say:

Proposal

Acceptance

Promissory & promise

Consideration & agreement

Inflation: Too much money chases too few goods

Deflation: Too little money chases too many goods

Necessity of Foreign Exchange:

No country is sufficient in this world. Every country is more or less depended on another for goods or services. Such as:  Education, Medical Science, Export or Import, Agricultural commodities, Industrial products etc. All these transaction needs foreign currencies which are related to Foreign Exchange.

Remittance:

Remittance means a system to transfer of currency from one place to another or from one country to another country through Banking Channel.

The remittances are affected through DD, TT, PO or SWIFT, web site etc.

 SWIFT- Society for worldwide Inter Financial Telecommunication

SWIFT is the most dependable & speedy system for International money transfer.

Nostro Account: means our account with you. When a Bank maintains a foreign Currency account with a foreign Bank abroad the account is called NOSTRO Account.

Vostro Account: means your Account with us. When a Foreign Bank maintains a convertible Taka account with Bangladesh Bank or with its Branch in Bangladesh, the Taka Account to be called VOSTRO Account.

Accounting Auditing Organization for Islamic Financial Institutions (AAOIFI)

It is an International autonomous non profit making body for Islamic Banks & Financial institutions. It was established in 1990 in Algeria.

Membership:

a. Founding members.

b. Non founding, members

c. Observer members

Structure:

(i) General Assembly

(ii) Board of Trustee

(iii) Standard Boards

(iv) Executive Committee

(v) Shariah Committee

Objectives:

a. To develop the Banking practices

b. To circulate the activities of Islamic Financial Institution through training, seminars, newsletters.

c. To harmonize the accounting practices

d. Review the accounting & auditing standards for Islamic Financial Institution.

e. To give the guideline on the banking, investment & insurance.

Inco Terms:

Inco Terms means International Commercial Terms. These are also known as contact terms, Trade Terms, delivery Terms, sales Terms or Purchaser Terms. These Terms used in the field of International Trade or Foreign Trade. These Terms have been prepared & named by the International Chamber of Commerce (ICC) Paris, France & first published-1936

Who is Umar Chapra: Umar Chapra is a renowned Islamic Economist. Now he is working in K. S. A. as an advisor in the Saud Aravian Monetary Agency. He has lots of writings about Islamic Economics, Finance& Islamic Banking is as follows:

1. Towards a just monetary system
2. Islam & the economic challenge
3. Islam & Economic Development.

Specially the best writing “Towards a just monetary system”

Some books of Islami Banking:

1. Towards a just monetary system by Dr M Umar Chapra

2. Islam & the economic challenge by Dr M Umar Chapra

3. Islam & Economic Development by Dr M Umar Chapra

4. Islami arthonithi by Abul Ala Moududi.

5. Sud o Adunik Banking by Abul Ala Moududi.

6. Islamer Arthoniti by Maw. Md. Abdur Rahim